Non Partisan Association

To address Alberta's rural infrastructure deficit without breaking the provincial budget, the Alberta Non-Partisan Association supports investigating innovative funding and financing mechanisms that leverage private capital and optimize existing funds. These approaches have been proven effective worldwide.

Eight Innovative Funding Approaches

Mechanism	Description
Public-Private Partnerships (P3s)	Government contracts private entities to build and maintain infrastructure for 25-30 years with "availability payments" tied to condition standards, transferring project and maintenance risk to the private sector
Infrastructure Banks	Low-cost loans and guarantees from entities like the Canada Infrastructure Bank provide seed capital at low interest rates, making projects financially viable and attracting private co-investment
Dedicated Road Funds	Ring-fence a portion of the existing provincial fuel tax into an independently managed fund used solely for rural maintenance and renewal, as done in countries like Zambia and Kenya
Value Capture	Fund improvements by capturing a portion of increased property values resulting from better accessibility through development charges or long-term land leases
Performance-Based Contracts	Pay contractors for outcomes (maintaining pavement quality index) rather than activities (potholes filled), incentivizing quality work and reducing lifecycle costs
Green Bonds	Issue climate resilience bonds earmarked for sustainable infrastructure upgrades (improved drainage, fire-resistant bridges) that save money in future disaster recovery costs
Data-Driven Prioritization	Use analytics and asset management software to prioritize repairs based on risk rather than reacting to failures, saving 10-25% in maintenance costs through proactive intervention
Federal Grant Programs	Aggressively apply for competitive grants such as the Rural Transit Solutions Fund or Bridge Investment Program, which can cover up to $10 million per project

Public-Private Partnerships with Availability Payments

Instead of traditional tolls, the government contracts a private entity to build and maintain infrastructure for a long term (25-30 years). The government makes "availability payments" only if the infrastructure is in good, usable condition. This approach:

• Transfers project and maintenance risk to the private sector
• Incentivizes quality construction that minimizes long-term maintenance
• Provides predictable costs for government budget planning
• Avoids politically unpopular toll collection

Infrastructure Banks and Credit Programs

Utilizing low-cost loans and loan guarantees from entities like the Canada Infrastructure Bank (CIB) or similar programs provides "seed capital" at low interest rates. These financial tools:

• Make projects more financially viable for smaller municipalities
• Attract private co-investment by reducing project risk
• Enable larger infrastructure investments than municipal budgets alone would permit
• Provide expertise in project structuring and financing

Dedicated Road and Fuel Funds

Implementing a system where a specific portion of the existing provincial fuel tax is ring-fenced into a dedicated, independently managed "Road Fund" ensures consistent, predictable funding for rural maintenance. This approach:

• Protects infrastructure funding from annual budget pressures
• Creates direct connection between road use and road maintenance funding
• Enables long-term planning for maintenance cycles
• Has proven effective in developing and developed countries alike

Value Capture Mechanisms

Infrastructure improvements increase property values in surrounding areas. Value capture mechanisms fund improvements by capturing a portion of this increase through:

• Development charges for new projects in the surrounding area
• Long-term land leases on government-owned parcels
• Tax increment financing districts
• Special assessment districts for benefiting properties

Performance-Based Maintenance Contracts

Shifting from paying contractors for activities (number of potholes filled) to paying for outcomes (maintaining a certain pavement quality index) fundamentally changes incentives:

• Contractors invest in long-lasting, quality repairs
• Lifecycle costs are reduced through better initial work
• Government pays for results rather than effort
• Innovation is rewarded when it improves outcomes

Green and Climate Resilience Bonds

Issuing specific bonds where funds are earmarked for sustainable, climate-resilient infrastructure upgrades attracts investors increasingly interested in environmental, social, and governance (ESG) investments. Applications include:

• Improved drainage systems to handle extreme weather events
• Fire-resistant bridge construction in wildfire-prone areas
• Heat-resistant road surfaces for climate adaptation
• Projects that reduce future disaster recovery costs

Data-Driven, Risk-Based Prioritization

Using data analytics and asset management software to prioritize repairs based on a risk-based matrix rather than reacting to failures optimizes existing budgets:

• Identifies assets approaching failure before breakdown
• Prioritizes repairs with highest safety and economic impact
• Saves 10-25% in maintenance costs through proactive intervention
• Enables strategic deployment of limited resources

Leveraging Federal Grant Programs

Aggressively applying for competitive federal grants maximizes available funding. Programs such as the Rural Transit Solutions Fund or Bridge Investment Program can cover significant portions of project costs (up to $10 million for some projects) without impacting the provincial budget. Success requires:

• Dedicated staff to identify and pursue grant opportunities
• Shovel-ready project designs for rapid application
• Strong relationships with federal program administrators
• Strategic project selection matching federal priorities